With the help of this picture we will try and understand section 54 EC for long term capital gain exemption. Basically assessee can sell any long term capital asset and the gains thus obtained are exempted from tax applicability if he has invested them in certain REC or NHAI bonds etc .... Salient features of this scheme are , (1) The transferred(sold) asset can be any long term capital asset (Home ,Gold , Stocks (hold for more than 12 months) (2)Within a period of 6 months after the date of transfer , the capital gain must be invested in the specefied assets i.e bond redeemable after 3 years issued by NHAI (National Highway auuthority of India )or RECL(Rurakl electrification corporation limited ) where the interest rate offered is 6 % The interest earned from such investment is also liable for tax payment Example - Sushil had a home which hw was staying for 4-5 years and on the capital gain dervices after selling the house invested in REC /NHAI bond under section 54 EC , however he had gained 80 lakhs , he can get exemption only uptil 50 lakhs for such investment Exemption of capital gains using this scheme is , Lesser of (1)Actual amount invested in new asset (2) Capital gain (Subject to a maximum of 50 lakhs )
Posted on: Sun, 01 Sep 2013 12:00:34 +0000